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SOLEPROPRIETORSHIP
LECTURE # 3
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Out LineLegal Forms of BusinessesIntroduction to Sole
ProprietorshipDefinitions
CharacteristicsAdvantagesDisadvantagesScope of sole
proprietorshipOne man controlSuitabilitySuggestions To Promote Sole
Proprietorship
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LEGAL FORMS OF BUSINESSSole Proprietorship
PartnershipCompany
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Introduction
Simplest Form of BusinessOldest Form of Business
No Legal RequirementsSingle Trader
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Sole proprietorship form of business ownershipin which the
Business is owned and operated byone person.
DEFINITION
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Ownership
Management & controlFinanceRisk
Unlimited liabilityLegal statusRelationship with customers
CHARACTERISTICS
Ease of dissolutionNo legal formalities
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ADVANTAGESEase of formation
Sole authoritySole claim on profitFlexible and inexpensive
management
Credit standingMinimum legal restrictionsSecrecy
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Possible tax advantageDirect relationship with customersPower to
start & close the businessBenefit of inherited goodwillReducing
concentration of wealth
Self employmentDevelopment of personal qualitiesSocial
benefits
Cont..
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Burden of unlimited liabilityDifficulties of expansion
Limited managerial abilityAbsence in specializationWeak
bargaining positionUnsuitable for a developing business
Lack of continuity
Loss in absence
DISADVANTAGES
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what is meant by one man control
Statute of one man business
ONE MAN CONTROL IS
BEST IN THE WORLD
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Is one man control bestin the world????...
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SUITABILITY
Where market is local. When personal contract with customers
is
required.
Where one likes being his own boss. Where promptness is required
in decision
making .
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PREFERENCE OF SOLE
PROPRIETORSHIP
OVER
OTHER FORMS OF BUSINESS
ORGANIZATIONS
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SCOPE & FUTURE
Ease of formation
Promptness in decision-makingOwnership of all profits
SecrecyLow cost organizationCredit rating
Flexibility
PersonalsatisfactionEase of
dissolutionPersonal touch
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SUGGESTIONS TO PROMOTESOLE PROPRIETORSHIP
LEGAL PROTECTION
AVAILABILITY OF LOANADVISORY SERVICEINSURANCE OF BUSINESS
TAX CONCESSIONREBATE IN COST OF PRODUCTION
